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Electrification of Auto Industry Poised to Create Exponential Growth

by Mary Rooney | Nov 09, 2021

The electric vehicle market in the United States has grown from a few thousand vehicles in 2010 to more than 315,000 vehicles sold annually from 2018 to 2020. EVs accounted for 2.8% of new vehicles registered in 2020, which is triple the number from three years ago. 

While plug-in vehicles, including all-electric and plug-in hybrids, are forecasted to account for only 4% of the U.S. market in 2021, there’s expected to be a rapid adoption globally over the next decade. IHS Markit forecasts that by 2025, EVs will comprise 10% of all new cars sold in the U.S. The firm believes consumer acceptance of EVs will continue to grow as more companies continue throwing their weight behind the zero-emissions powertrain movement. 

Multiple factors are contributing to this growth. Notably, electric cars are gradually becoming more competitive in some countries, in terms of total cost of ownership. Several governments are providing or extending fiscal incentives that buffered electric car purchases from the downturn in car markets. 

In addition, a recent analysis found that electric vehicle growth is linked to greater availability of public and workplace charging. Charging stations could become more accessible in the U.S. soon. The $1 trillion U.S. infrastructure plan, passed by the House of Representatives last week, is projected to include $7.5 billion for electric vehicle charging stations. It would also provide $5 billion for the purchase of electric school buses and hybrids, reducing reliance on school buses that run on diesel fuel.

The investments are being made now in preparation for new demand. It is estimated that companies in the global electric vehicle industry will be investing $330 billion in the next five years. Roughly a third of that will go toward battery production, believes AlixPartners, an American consulting firm.

There are 27 battery facilities, including cells and packs, that have been announced or are currently operating in the U.S., according to the Center for Automotive Research.

Learn more about the Kansas City region’s automotive industry.

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